State Your Piece

I recall vividly the events of this time, prior to a presidential election in 2008, where capital markets were rocked in alarming fashion.  Amid all the chaos, seemingly orchestrated, rang out the proclamations of a US Representative noting an electronic run on the banks questioning an attack of economic terrorism.

On this day, along with factual evidence of the wreckage of a collapse in value of bundled mortgages as a result of a crashing housing market, conspiracies abound on the causes on the actual influence which took the market from an aftershock downdraft of a bubble to something potentially far worse.

What had actually happened remains in question.  Did a series of mutually exclusive events occur in random as part of a what could be considered a perfect storm?  Was it infiltration from within, attempting to influence the election?

In recent months, former Treasury Secretary Hank Paulson recently confirmed what many has long speculated, which was there was orchestrated efforts to collapse our economic system, with only the level of teamwork remaining in question. Russia and China collaborated on potential plan to destroy the US dollar.

The hardest thing to explain is the glaringly evident which everybody had decided not to see – Ayn Rand.

Its the Euro theatre.

While our President is seemingly disengaged from the world (he is NOT), the world is on fire.  The middle east is in complete chaos, Israel is engaged in an offensive to preserve liberty for their people against HAMAS, a militant terrorist group and proxy militia of Iran, who just gets closer and closer to nuclear weapon everyday amidst all the distraction. Perhaps a reflection on the definition of the flexibility Obama described to Russian PM Medvedev would be appropriate.

Recently, Russia and China have been reported to have signed a historic gas pipeline mega deal, which could have severe economic ramifications on the US capital markets, perhaps phasing out the dollar.

After a tussle with Georgia a few years back, since the conclusion of the Olympics, Vladmir Putin and Russia have been flexing their muscles, engaging in invasive military strikes against their neighbors in the Ukraine.  With the west in a weakened position, seemingly by design, the opposition to the activities of Russia goes unabated, even in the aftermath of the shooting down of a commercial passenger airline. 

You may think China is watching all this with a bucket of buttered popcorn and a Coca Cola, but you would be wrong.

China has been reported to have increased and expanded naval drills in areas off the coast of Vietnam and the Philippines. China has been building its naval forces for years now, and has been found to have been lurking around America and our outposts around the world, inclusive of Taiwan and Japan.

China is pretending to be a diplomatic ally of the west even as it is actively engaging in trade pacts with Russia and subverting US military influence around its borders, and especially in regions it deems of vital national interest--Tyler Durden/Zero Hedge.

Kevin Freeman, in his book "Secret Weapon", examines the evidence linking rogue elements in Communist China, Russia, and Islamic finance to economic warfare against the United States.

Ominous warnings are everywhere, yielding appropriate concerns of The United States being on the precipice of an event, which could range from economic terrorism to the potential of another terrorist attack.  It is worth noting, the latter could well initiate the former.

From John Kerry and his meeting with the opponents of Israel to President Obama's inability or unwillingness to curtail the brazen encroachment of Russia, it seems clear our leadership is not going to be much help in deterring our enemies from attacking us in various forms.

In fact, it remains unclear which side these charlatans are actually on, as they're actions are not representative of our people.

While foreign affairs are screwing us rotten
Line morale has hit rock bottom
Dying embers stand forgotten
Talks of peace were being trodden
Stand or fall
State your peace tonight

Zeppelin Downdraft

An interesting post appeared over at Tyler Durden's fantastic blog Zero Hedge. 

 

Video of an interview with Marc Faber on CNBC was presented, where Faber prognosticates that at the end of the year the stock market will be potentially over 20% lower than current levels.  While Faber, publisher of the Gloom, Boom & Doom Report, eery similarities between the fundamental and technical backdrop 1987 and today.

 

With respect to the stock market, in 1987 the market was engaged in the greatest bull market in history.  Although at the time few could see the forest for the trees, the '87 crash presented a wonderful buying opportunity, fueled in part by emerging technological advancements. Technically, the area where we deem Faber correct in his analysis, Faber has noted an ominous chart pattern that has presented itself with increasing frequency in recent days; The Hindenburg Omen.

 

 

It is noted there has been historical evidence in matching chart patterns to past performances, and when comparing the market in 1987 to the market today, we can see the movements during this period have been quite similar.  I don't know what I am having for lunch tomorrow, but I recognize the story this chart is telling.

 

Fundamentally, both the micro and macro economic realities fail to resemble the landscape of 1987. It is worth noting the economy in 1987, with the Reagan Revolution well underway, was significantly superior in virtually every measurable statistic to our current economic conditions. 

In an extremely extended market where trading levels do not match fundamentals on the ground, extreme caution should be exhibited.  Too many dollars are chasing too few assets, and even with the FED fueling the pump, the overextended stock market looks primed for a downdraft.  The economy is in very sad shape, not withstanding the propaganda saying otherwise backed my manipulated data.  The unemployment rate is the best example, as the labor participation chart is disconnected to the reported unemployment rate,

It may be time to take profits, as recommended by Guggenheim, keeping in mind pigs get slaughtered.  Although it is tough to fight the tape, it would be most prudent to proceed with caution at this time.